Officials' emails give glimpse of incentive talks with Voestalpine

CORPUS CHRISTI - Emails between local leaders and a company proposing a $700 million plant at the Port of Corpus Christi show how possible annexation of the site may have become a bargaining chip in negotiations for economic incentives.

They also show how the project could have stalled over what officials now say was a misinterpretation of the email. And they give a rare window into behind-the-scenes discussions for a major business prospect, showing how relationships between regional leaders can be built or broken on a single deal.

Corpus Christi Mayor Nelda Martinez has said the city now is considering an unspecified “economic development tool” to assuage the annexation worries of Voestalpine, the Austrian steel-maker planning the iron ore processing facility on the bay between Portland and Ingleside. If the city annexed the site, it could have cost the company millions of dollars a year in additional property taxes.

In emails from November 2012 obtained under the Texas Public Information Act, Voestalpine official Matthias Pastl told Martinez the company would suspend its project and he would be assigned to another location — after living in Corpus Christi for about two months — because of the annexation problem, potentially letting a competing site win out over the port.

Seventeen other locations in eight countries were competing for the plant, the company’s largest direct investment.

The site, part of the port’s La Quinta Trade Gateway, lies within the area Corpus Christi is allowed to annex. If that happened, it would subject the plant, and the land valued at an additional $42 million, to city property taxes.

Both Martinez and Pastl have downplayed the annexation flap, with Pastl calling it a hiccup typical of negotiations for any large project. Martinez said annexation in the near future would have been all but impossible, given the cost of extending city services to an area on the other side of the bay. But she couldn’t guarantee it would never happen.

San Patricio County Judge Terry Simpson scolded the mayor in the email for what he wrote were Corpus Christi’s plans to draw tax dollars out of his county’s jurisdiction. But in an interview he said the assumption that Corpus Christi had some imminent plan for annexation or taxing was based on a misinterpretation of the email.

He said Pastl’s email was alarming because it appeared the project could fall apart after months of work, depriving the region of another industry and provider of at least 150 new jobs. Moreover, he said, the situation threatened to undo a decade of relationship building between local leaders who have worked to set their own interests aside for the good of the region.

He said once everyone involved in the exchange spoke to one another and cleared up the misinterpretations, those relationships emerged intact.

“The damage has been repaired,” he said.

In the email, Martinez told Simpson the city had no annexing or taxation plans but did have responsibilities in relation to the site because it borders the city limits, which encompass the bay.

In government parlance, these outlying areas are called the extraterritorial jurisdiction of a city, and state law outlines rules for how city services, annexation and other matters unfold there.

The sides reached an agreement within 48 hours of the email exchange, Martinez said, declining to elaborate. State law allows governments to keep economic development negotiations secret until they come up for a vote. She wasn’t sure when it would go before the city council.

Corpus Christi has used industrial district contracts to alleviate annexation worries of other big industrial players. If that happened with Voestalpine, the plant site would be designated an industrial district and would get a guarantee of no annexation for a certain period. In return, it would pay the city only a percentage of what it would have in property taxes.

Current industrial district rules in Corpus Christi limit such payments to 60 percent, with a 15-year guarantee against annexation. The council could approve different terms for contracts executed after 2014, city records show. Voestalpine said its plant could be online in 2016.